If a firm does not have adequate profits or cash to pay an expected dividend, what...
If a firm does not have adequate profits or cash to pay an expected dividend, what concept is most likely to cause a firm to consider borrowing money to ensure payment of the dividend?
Multiple Choice
Clientele effect
Expectations theory
Residual dividend theory
Signaling hypothesis
Homework Answers
Clientele Effect
A particular set of investors are associated with a particular type of stocks for current income, so this concept persuades firm to pay dividend by borrowing funds.
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